Tax Deductions You Can Take When You Move

It’s been an interesting few weeks. My husband got a new job, all the way across the country. So we’ve packed everything up and we’re moving. There are a lot of things to consider when you move, from making sure you have the insurance you need to being sure that the utilities are turned on in your new place.

Additionally, it often feels as though all you do is spend, spend, spend. There are a lot of costs when it comes to moving, from paying to transport your items, to the hotels you stay in along the way. It’s amazing how fast it adds up.

While it can be painfully expensive to move, there is a way to take some of the edge off. Interestingly enough, it has to do with the IRS. That’s right: The IRS can make your move a little more palatable. With the right approach, you can receive a tax deduction for your move. If you are starting over again in a new place, don’t forget to save your receipts and plan for a tax break.

Your Moving Tax Deduction

First of all, the tax deduction for moving is “above the line,” meaning that you don’t have to itemize to take it. You figure your tax deduction as part of the process of arriving at your adjusted gross income. This is very helpful for many people.

Not just anyone can claim this tax break, though. You need to meet three requirements in order to claim the tax deduction:

Your move must be closely related to the time and place that you are starting a new job. In order to meet this requirement, you must move within one year of the first time you reported for work, and your new location must be closer to your new job than your old location.

Your new job must be at least 50 miles farther from your old home than your old job was. If you are starting a new job, and haven’t had an old job, you have to move to a home that is at least 50 miles away from the old home.

There is a also a time test that requires that you work at least full-time for 39 weeks out of the 12 months following your arrival. There are some exceptions in special circumstances, but you need to make sure you can explain those to the IRS if you want to avoid problems.

You can deduct what the IRS terms “reasonable” moving expenses. This includes the cost of the moving truck or moving service, as well as the cost of hotels, tolls, and parking related to the move. You can’t ever deduct meals during your move.

It’s important to realize that if you are compensated for your move, you can’t deduct that amount. In our case, the move costs about $5,600. However, my husband’s new employer is paying for $3,000 of the move. That $3,000 paid by the employer isn’t tax-deductible. However, the $2,600 that we are responsible for is tax-deductible.

If you have any questions about taking this tax deduction, consult a knowledgeable tax professional.